Aug 11, 2011

Not Just Bad Paperwork

In July, Immigration and Customs Enforcement announced that it had indicted four men and dismantled an entire antiquities smuggling network. The indictments in what I'll call the "Lewis Smuggling Network" alleged that the four men sent objects from Egypt to Dubai before coming to America. The case brings to mind another similar kind of prosecution in which an individual was accused of not properly declaring the history and value of antiquities being imported into the United States. The case offers a number of similarities to an older case involving customs declaration.

In 1980 a gold phiale, called the golden phiale of Achyris, pictured here, probably of Sicilian origin, was sold by a collector in Sicily to another collector and coin dealer, who in turn sold the work to William Veres, an art dealer based in Zurich, Switzerland (it gets confusing and we still haven't reached the ultimate endpoint). The phiale was offered to Robert Haber, a New York art dealer. Haber acted as a middle man in an eventual sale to Michael Steinhardt for $1.2 million. In December 1991, Haber flew to Switzerland to retrieve the phiale. Upon his return to New York, the customs forms declared the work’s country of origin as Switzerland and its value a mere $250,000. Why did the customs forms lie? To hid and disguise the object's history.

In 1995, Italy began asking for formal assistance, and the Federal government intervened with a civil forfeiture action. A federal magistrate in New York issued a warrant for the seizure of the phiale from Steinhardt. The U.S. government then instituted a civil forfeiture action against the phiale in federal district court in New York. The district court held that the phiale was subject to forfeiture under 18 U.S.C. § 545. The importation of goods “by means of false statements” is prohibited by 18 U.S.C. § 542 and renders them subject to forfeiture under 18 U.S.C. § 545. The court found that falsely listing the work’s country of origin as Switzerland tainted the importation process and violated § 542. Steinhardt defended on the grounds that he had no knowledge that the object was looted or stolen. The court disagreed, finding that 18 U.S.C. § 545 does not afford an innocent owner defense. Steinhardt appealed the district court’s decision. The Second Circuit affirmed on the grounds that the misstatement of the phiale’s country of origin was material and thus subjected it to forfeiture under 18 U.S.C. § 545.

This recent case has the Federal prosecutors pursuing charges against the dealers and collector in this case. They are not pursuing the object by itself, but rather they have a case against the whole network. Irrespective of whether Steinhardt, and his intermediary should have known and asked more closely about what they were buying, there were false statements made on the importation documents, just as false statements were alleged to have been made in this recent sting. Both Steinhardt and Lewis held esteemed positions, with power and influence. In Lewis' case however, the Federal Prosecutors feel they have a much stronger case, with information on the entire smuggling and looting network, not just an isolated false statement on an importation document. In any event, neither Lewis nor Steinhardt will likely consider their cases bad paperwork. Misrepresenting the value and nation of origin is a deliberate attempt to circumnavigate heritage law. And if the government can make its case, there may be some real custodial sentences imposed.